Danaher 2011 Annual Report Download - page 58

Table of Contents
and under which Danaher has agreed to pay expenses in advance of the final disposition of any such indemnifiable proceeding. While the Company maintains
insurance for this type of liability, a significant deductible applies to this coverage and any such liability could exceed the amount of the insurance coverage.
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Please refer to Note 14 to the Consolidated Financial Statements included in this Annual Report for information regarding certain litigation matters.
In addition to the litigation matters noted under “Item 1. Business – Regulatory Matters – Environmental, Health & Safety”, the Company is, from time to
time, subject to a variety of litigation and similar proceedings incidental to its business (or the business operations of previously owned entities). These
lawsuits primarily involve claims for damages arising out of the use of the Company’s products and services and claims relating to intellectual property
matters, employment matters, tax matters, commercial disputes, competition and sales and trading practices, personal injury and insurance coverage. The
Company may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties
or indemnities provided in connection with, divested businesses. Some of these lawsuits may include claims for punitive and consequential, as well as
compensatory damages. Based upon the Company’s experience, current information and applicable law, it does not believe that these proceedings and claims
will have a material effect on its financial statements.
While the Company maintains general, products, property, workers’ compensation, automobile, cargo, aviation, crime, fiduciary and directors’ and officers’
liability insurance (and has acquired rights under similar policies in connection with certain acquisitions) up to certain limits that cover certain of these
claims, this insurance may be insufficient or unavailable to cover such losses. For general and products liability and most other insured risks, the Company
purchases outside insurance coverage only for severe losses (“stop loss” insurance) and must establish and maintain reserves with respect to amounts within
the self-insured retention. In addition, while the Company believes it is entitled to indemnification from third parties for some of these claims, these rights may
also be insufficient or unavailable to cover such losses.
The Company recognizes a liability for any contingency that is probable of occurrence and reasonably estimable. The Company periodically assesses the
likelihood of adverse judgments or outcomes for these matters, as well as amounts or ranges of probable losses, and if appropriate recognizes a reserve for
these contingencies. These reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these claims as
well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel and
outside risk insurance professionals where appropriate. In addition, outside risk insurance professionals assist in the determination of reserves for incurred
but not yet reported claims through evaluation of the Company’s specific loss history, actual claims reported, and industry trends among statistical and other
factors. Reserve estimates are adjusted as additional information regarding a claim becomes known. Because most contingencies are resolved over long periods
of time, liabilities may change in the future due to new developments (including litigation developments, the discovery of new facts, changes in legislation and
outcomes of similar cases), changes in assumptions or changes in our settlement strategy. While the Company actively pursues financial recoveries from
insurance providers, it does not recognize any recoveries until realized or until such time as a sustained pattern of collections is established related to historical
matters of a similar nature and magnitude. If the Company’s self-insurance and litigation reserves prove inadequate, it would be required to incur an expense
equal to the amount of the loss incurred in excess of the reserves, which would adversely affect the Company’s net earnings. Please see Note 9 to the
Consolidated Financial Statements for information about the amount of our accruals for self-insurance and litigation liability.
For a discussion of additional risks related to legal proceedings, please refer to “Item 1A. Risk Factors.”
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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